N@N

Community Business Bank Reports Results for 2008

^{Published on 2009-01-30 20:50:45, Last Modified on 2009-01-30 20:53:12 - Market Wire}
 

SACRAMENTO, Calif.--([ BUSINESS WIRE ])--Community Business Bank (OTCBB:CBBC) today reported a loss for 2008 of $956,000, or $(.45) per diluted share, compared with earnings of $134,000, or $0.06 per diluted share for the comparable period one year ago. The Bank realized a loss of $639,000, or $(.30) per diluted share for the fourth quarter ended December 31, 2008, compared with earnings of $43,000, or $0.02 per diluted share for the comparable period one year ago.

Financial Highlights

• Preliminary approval for TARP Capital received from the U.S. Treasury
• Total loans increased by 12%, or $13 million to $121 million, compared with $108 million in Q4 2007
• Allowance for loan and lease losses (ALLL) was $1.9 million or 1.60% of total loans, compared with $1.2 million or 1.13% in Q4 2007
• Deposits increased by 18%, or $17 million to $109 million, compared with $92 million in Q4 2007
• Noninterest bearing deposits increased 41%, or $5.3 million to $18.1 million, compared with $12.8 million in Q4 2007
• Other borrowings decreased by 93%, or $5.1 million to $.4 million, compared with $5.5 million in Q4 2007

Operating Results

The major cause of the loss incurred for the fourth quarter of 2008 as well as for the full year was the increase in the provision for loan losses. The provision for loan losses was $1.6 million for the year, up $1.3 million from year-end 2007. The provision was $901,000 in the fourth quarter of 2008, which was up $679,000 from $222,000 in the like period of 2007. With this additional provision, the ALLL to Gross Loans ratio was 1.60% at year-end 2008 compared to 1.13% at year-end 2007. This ratio reflects Management's decision to keep the ALLL at the high end of the supportable industry range due to the uncertainty of the economy. The year-end 2008 balance of the ALLL was $1.9 million; this also reflects the reduction of the ALLL due to approximately $800,000 in loans charged off during the year.

Net interest income for the year ending December 2008 increased $1.0 million or 24% over that of December 2007. Net interest income for the fourth quarter of 2008 increased 11% or $139,000 to $1.4 million compared with the same period in 2007. This improvement was primarily a result of earning assets increasing by $11 million and a reduction of interest expense of $344,000.

Noninterest income for the year ended December 31, 2008 was $485,000, down $290,000 from 2007. In the fourth quarter 2008, non-interest income decreased by $133,000 to $269,000, compared with the like timeframe in 2007. This drop for the year and the fourth quarter was primarily due to lower income related to gains on sale of loans.

On a year-to-date basis, noninterest expense increased by $500,000 to $5.3 million. A reduction in loan origination costs (which increased personnel expense) was responsible for approximately $200,000 of this variance. The majority of the balance of this increase was in compensation-related expense (approximately $200,000) and occupancy costs (approximately $100,000) associated with higher lease expense for new Bank premises. Noninterest expense was up marginally at $9,000 in the fourth quarter of 2008 over the same period in 2007.

Balance Sheet Summary

As of December 31, 2008, total loans grew by 12% or $13 million to $121 million from $108 million at the end of the fourth quarter of 2007. Commercial real estate loans accounted for the largest percentage of the total loan portfolio at 35% of total loans, up from 28% one year ago. The concentration of construction loans decreased to 24%, compared with 31% one year ago. Commercial loans increased to 23% of the portfolio, up from 16% at December 31, 2007.

As of December 31, 2008, the allowance for loan and lease losses (ALLL) was $1.9 million, or 1.60% of gross loans, compared with $1.2 million, or 1.13% of gross loans at the end of the fourth quarter 2007. Management's assessment of the adequacy of the ALLL takes into consideration changes in loan volumes, concentrations and other qualitative factors including loan growth, which declined in 2008 as compared to 2007. The provision of $1.6 million recorded in 2008 reflects the deteriorating economy and the resultant credit challenges faced by Management in 2008. Management has been diligently addressing these loan quality issues and will continue to do so in 2009. Over the last nine months, the Bank's loan personnel have been actively managing the loan portfolio to further mitigate losses.

Total deposits were $109 million at December 31, 2008 compared with $93 million a year ago. The largest growth was from wholesale certificates of deposit. Wholesale certificates of deposits increased by $18 million compared with a year ago. This increase was equally split between brokered ($9.1 million) and CDARs ($8.9 million) deposits. These CDARs deposits are comprised of primarily core Bank customers; approximately 55% of these funds are from directors, founders, or shareholders of the Bank. These customers have decided to move out of traditional core banking products and into this offering for additional security of their funds due to uncertainty in the financial marketplace. Management has continued its Liability Management Strategy in order to drive down its cost of funds. Replacement of high-cost promotional retail CDs with wholesale funding is part of the initial phase of this program. Noninterest Bearing DDA increased $5.3 million and Savings and Money Market deposits were up $4.4 million since December 2007 due to business development efforts and execution of our business plan. Retail CDs decreased $11.5 million from a year ago, primarily due to the run-off of higher-cost "specials" and replacement with wholesale funding sources.

The Bank elected to participate in the transaction account guarantee program portion of the Temporary Liquidity Guarantee Program (TLGP) initiated by the FDIC in December 2008. This program provides a full guarantee of noninterest bearing deposit transaction accounts, regardless of dollar amount.

Shareholders' equity at December 31, 2008 decreased by approximately $900,000 to $18.1 million from $19.0 million a year ago. This drop was primarily due to the large loan loss provision and its impact on the net loss. The Bank continues to be "well-capitalized" under all regulatory categories.

"It should be no surprise to anyone that our local, regional, state, national and world economy has changed dramatically over the last year and has created a significant impact on Community Business Bank's performance and on us as individuals," said John DiMichele, President and Chief Executive Officer.

"We know that 2009 will be a difficult year. We don't control all of the many factors that impact Bank performance. However, we do plan to continue actively managing through the Bank's current challenges and pursue opportunities that will enhance Community Business Bank's long-term financial performance," stated DiMichele.

The Bank's Call Reports are available for review or download directly from the FDIC website at [ www.fdic.gov ], or through the link at the Bank's website at [ www.communitybizbank.com ].

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and factors such as: (1) the impact of changes in interest rates, (2) fluctuation in economic conditions, (3) competition in the Company's defined market, (4) the Company's ability to sustain its internal growth rate and to preserve its earning assets quality, and (5) government regulations. Although the Company believes the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct.